Special Report

10 States Where Manufacturing Still Matters

worker using torch cutter to cut through metalEconomic activity in America’s manufacturing sector rose for the thirteenth consecutive month this June, according to the Institute for Supply Management. Manufacturing jobs have been on the upswing as well, rising for the eleventh straight month in June. Despite employment growth in the sector, manufacturing jobs appear unlikely to reach the relative share of total U.S. jobs they once held.

Manufacturing accounted for more than 12% of the United States’ GDP in 2013, with output from the sector totaling more than $2 trillion. In some states, manufacturing makes up a far greater share of the local economy. Last year, manufacturing accounted for more than 30% of Indiana’s state GDP, the most in the nation. Using 2013 figures published by the Bureau of Economic Analysis for 2013, 24/7 Wall St. identified the 10 states where manufacturing still matters.

Click here to see the 10 states where manufacturing still matters

A number of factors suggest a healthy manufacturing sector Chad Moutray, chief economist at the National Association of Manufacturers, said in an interview with 24/7 Wall St. These factors include continued long-term and recent growth, high levels of investment, and the addition of 600,000 manufacturing jobs post-recession. “I think that really speaks to that boost in the sector since the recession. Many people call it a renaissance,” Moutray said.

Many of the top manufacturing states are located in the Midwest and the Southeast. In the Midwest, Moutray noted, we see more traditional manufacturing industries such as auto production, airplane production, metals, machinery, plastics and chemicals. The Southeast, he added, offers more of a growth story. “The southeast is a very attractive place to do business,” Moutray said. “Investment is really flowing into the Southeast. And I think that’s really helping to drive a lot of additional manufacturing growth and employment.”

The states with the biggest manufacturing economies specialize in different industries. In Oregon — the state with the second highest share of GDP coming from manufacturing — high-tech manufacturing is especially prominent, Moutray pointed out. Oregon’s computer and electronic product manufacturing industry alone accounted for 23.1%, or $48.6 billion, of the state’s output in 2012. In Louisiana, 9.2% of the state’s 2012 GDP came from petroleum and coal-based product manufacturing.

Consistent auto industry growth in recent years helped drive manufacturing output in several states. Michigan and Indiana, two of the top five states where manufacturing still matters, both depend heavily on auto manufacturing. The states’ motor vehicle sectors generated 7.6% and 5.0% of their total 2012 output, respectively, the two highest auto-industry contributions nationwide.

Other industries are also playing a huge role in manufacturing’s recovery, Moutray noted. These include industries such as machinery and electrical equipment, as well as raw metals and metal products manufacturing. Moutray also cited growth in plastics making, which “speaks to the growth of energy and shale,” since natural gas and petroleum products are used to make plastics.

Many of the states with strong manufacturing industries are able to export large quantities of their products. Seven states were among the 15 top national exporters of manufactured goods in 2012, with exports totaling at least $32 billion per state. These states’ export growth rates since the end of the recession has been among the largest. Michigan and Louisiana in particular have exported around 20% more manufactured goods each year over that period.

Moutray also highlighted the importance of exporting to states’ manufacturing sectors. “When you look at the states that are doing well … since the end of 2009, it’s not surprising that those are the states that are exporting most.” He added that this “shows the importance of trade for manufacturers,” and “that manufacturers in the U.S. can compete” on the global stage.

To identify the 10 states where manufacturing matters, 24/7 Wall St. used state gross domestic product (GDP) figures published by the Bureau of Economic Analysis for 2013. We determined which states had the largest percentage of total output attributable to manufacturing. Data on specific industries within the manufacturing sector are from 2012 and represent the most recent available figures. Employment figures for each state come from the Bureau of Labor Statistics and are seasonally adjusted.

These are the states where manufacturing still matters.

10. South Carolina
> Manufacturing share of output: 17.3%
> Manufacturing output 2013: $31.8 billion (24th highest)
> 2012 exports from manufacturing: $23.3 billion (20th highest)
> 2013 unemployment rate: 7.6% (16th highest)

Manufacturing accounted for 17.3% of South Carolina’s state GDP last year. The state was a top manufacturer of both durable and nondurable goods, with each contributing 9.8% and 7.5% to the state’s output, respectively. Much of the state’s durable goods output came from motor vehicle and parts manufacturing, which accounted for nearly $4 billion, or about 2.2%, of state GDP in 2012.This was more than all but a handful of states. Major auto industry companies located in the state include Michelin and BMW. Additionally, South Carolina was also among the nation’s largest plastics and rubber manufacturers, with this industry accounting for nearly $3 billion, or 1.7%, of state GDP in 2012, more than in any other state.

9. Ohio
> Manufacturing share of output: 17.7%
> Manufacturing output 2013: $99.8 billion (4th highest)
> 2012 exports from manufacturing: $62.5 billion (4th highest)
> 2013 unemployment rate: 7.4% (19th highest)

Nearly 18% of Ohio’s total output in 2013 came from manufacturing. No other industry accounted for a greater share of the state’s GDP last year. Nondurable goods manufacturing constituted 8.2% of the state’s GDP and accounted for 0.5 percentage points of Ohio’s 1.8% GDP growth last year. Ohio was also among the nation’s leading auto manufacturers. The sector helped drive durable good production to 9.4% of total output in 2013. Ohio had one of the strongest export recoveries of any state in the country between 2009 and 2012, with exports growing at an annualized rate of nearly 12%. As of 2012, Ohio was the nation’s fourth largest exported of manufacturing exports, totaling over $62 billion.

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8. Alabama
> Manufacturing share of output: 17.8%
> Manufacturing output 2013: $34.4 billion (22nd highest)
> 2012 exports from manufacturing: $22.9 billion (21st highest)
> 2013 unemployment rate: 6.5% (18th lowest)

Alabama’s manufacturing sector generated nearly 18% of the state’s total output last year, the eighth highest nationwide. A relatively large proportion came from durable goods production. Primary metal manufacturing accounted for more than 2% of total output in 2012, more than in all but two other states. Nicknamed “Pittsburgh of the South,” Alabama’s largest city, Birmingham, is known for its steel industry. The region has large coal, iron, and limestone deposits, which are key components in the steel industry. Like most states where manufacturing still matters, high output means more manufacturing jobs. More than 13% of Alabama’s workforce was employed in manufacturing in 2012, versus 10.5% of employment nationwide.

7. Kentucky
> Manufacturing share of output: 18.3%
> Manufacturing output 2013: $33.6 billion (23rd highest)
> 2012 exports from manufacturing: $22.7 billion (23rd highest)
> 2013 unemployment rate: 8.3% (7th highest)

Kentucky’s manufacturing exports have been growing since the end of the recession. From 2009 through 2012 exports grew by nearly 15%. The manufacturing industry generated $33.6 billion last year, or 18.3% of state GDP. As of 2012, a relatively large proportion came from vehicle and auto parts manufacturing, which accounted for nearly 4% of total output, trailing only Michigan and Indiana. Kentucky is home to numerous large assembly plants run by companies such as Ford, General Motors, and Toyota. The three auto giants continue to invest billions in the state. Durable goods manufacturing contributed 0.34 percentage points to the state’s estimated 1.6% GDP growth last year, a higher proportion than all but five other states.

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6. Wisconsin
> Manufacturing share of output: 18.9%
> Manufacturing output 2013: $53.4 billion (13th highest)
> 2012 exports from manufacturing: $32.6 billion (13th highest)
> 2013 unemployment rate: 6.7% (23rd lowest)

More than 18% of Wisconsin’s employees worked in manufacturing in 2012, more than in all but one other state. Additionally Wisconsin was among the nation’s leaders in durable goods manufacturing, which accounted for 11% of the state’s total output last year. However, durable goods manufacturing was a drag on growth in 2013, lowering GDP growth by 0.14 percentage points. As of 2012, Wisconsin was among the largest producers of fabricated metal products, which accounted for 2.2% of the state’s output that year. Ball Corporation alone operates three facilities in Wisconsin that produce metal packaging for food, beverages, and household products. The state was also a leader in machinery manufacturing, which contributed nearly $8 billion to the state’s GDP in 2012, accounting for 2.9% of output. Wisconsin is home to mining machinery giant Joy Global’s headquarters as well as one of its major manufacturing facilities.

5. Michigan
> Manufacturing share of output: 19.0%
> Manufacturing output 2013: $82.3 billion (7th highest)
> 2012 exports from manufacturing: $63.1 billion (3rd highest)
> 2013 unemployment rate: 8.8% (5th highest)

Not only does Michigan’s manufacturing industry account for a large proportion of its total output, but it also exports huge volumes of its products. Michigan exported over $63 billion worth of manufacturing goods in 2012, trailing only Texas and California. Manufacturing exports rose at an annualized rate of 22% between 2009 and 2012, better than in any other state. Durable goods manufacturing accounted for nearly 0.6 percentage points of Michigan’s estimated 2.0% GDP growth last year, a greater contribution than in any state except for Oregon. More than half of all durable goods production came from motor vehicle and parts manufacturing in 2012, accounting for 7.6% of the state’s total output that year, the most nationwide. The manufacturing industry employed 17.2% of the state’s workforce in 2012, the third highest proportion in the country.

4. North Carolina
> Manufacturing share of output: 20.9%
> Manufacturing output 2013: $98.3 billion (5th highest)
> 2012 exports from manufacturing: $55.8 billion (7th highest)
> 2013 unemployment rate: 8.0% (11th highest)

North Carolina had the nation’s third-highest output of non-durable goods in 2013, at more than $63.5 billion. This was the equivalent of 13.5% of the state’s GDP that year. Roughly $19.4 billion of state GDP in 2012 came from food, beverage and tobacco products manufacturing. This was equal to more than 4% of total output in the state that year, the most in the nation. Helping to drive this figure may be the presence of a historically large tobacco industry in the state, which is also home to two of the nation’s largest cigarette makers, Reynolds American and Lorillard. The two companies have agreed to merge, with the deal projected to close next year, pending regulatory approval.

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3. Louisiana
> Manufacturing share of output: 23.4%
> Manufacturing output 2013: $59.3 billion (11th highest)
> 2012 exports from manufacturing: $47.2 billion (8th highest)
> 2013 unemployment rate: 6.2% (15th lowest)

Louisiana led the nation in the production of nondurable goods in 2013. In fact, the state owes much of its economic performance in recent years to the sector. Without nondurable goods, the state’s economy would have shrunk in 2013 by over 1.3%. Including non-durable goods, the state’s economy grew by 1.3%. More than 18% of total output in 2012 was attributable to energy and chemical products manufacturing alone. The state was also among the largest exporters of manufactured products in the U.S. in 2012. Between 2009 and 2012, manufacturing exports grew at an average annual rate of over 19%, more than all but one other state in the U.S. Despite manufacturing’s considerable size in the state, the sector accounted for just 7.9% of all employees in 2012, well below the national share of 10.5%.

2. Oregon
> Manufacturing share of output: 29.8%
> Manufacturing output 2013: $65.4 billion (10th highest)
> 2012 exports from manufacturing: $34.7 billion (12th highest)
> 2013 unemployment rate: 7.7% (14th highest)

Oregon’s economy grew by 2.7% in 2013, better than most states. Durable goods manufacturing contributed 1.1 percentage points to this growth, the largest such contribution in the nation. This is hardly a surprise — while durable goods manufacturing made up nearly 28% of the state’s economy in 2013, by far the highest percentage in the nation. The state’s high-tech industry accounts for most of Oregon’s strong manufacturing sector. Computer and electronic products manufacturing generated more than 23% of all output, by far the largest share of any state’s technology sector. Intel, which manufacturers semiconductors in the state, claims it is Oregon’s largest private sector employer.

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1. Indiana
> Manufacturing share of output: 30.1%
> Manufacturing output 2013: $95.3 billion (6th highest)
> 2012 exports from manufacturing: $61.9 billion (6th highest)
> 2013 unemployment rate: 7.5% (17th highest)

No state generated more of its output from manufacturing last year than Indiana, where manufacturing accounted for 30% of state GDP. Additionally, the state was the nation’s second-largest manufacturer of both durable and nondurable goods as a percent of total output. The state’s auto industry helped to drive durable goods manufacturing, accounting for 5% of Indiana’s output, or nearly $15.5 billion, in 2012. Toyota, Honda, and Subaru all maintain facilities in the state, and auto parts giant Cummins is based in Indiana. More than half of the state’s nondurable goods output in 2012 came from chemical products manufacturing. At 8.9% of output, this was the most of any state. In addition to high output, the manufacturing sector accounted for 19% of all employees in 2012. Indiana was also one of the largest exporters of manufactured products in the nation in 2012, with $61.9 billion in such exports.

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